Personal Financial Planning essay
Q1. How are you saving for retirement? If you are currently not saving for retirement, design a plan for your retirement savings. Explain in 1 concise paragraph.
Retirement planning will strongly depend on the type of income that will be available in the future and the options offered by the employer. One possible way of planning for retirement is the following: investing about 4% of gross salary into an annuity which will yield the basic income and investing 3% of gross salary into an Individual Retirement Account with reasonable mutual fund investments and solid previous history. Such diversification allows
Q2. Would you favor reforming Social Security to eliminate inequalities in the distribution of spouse benefits? If so, what kind of changes would you propose?
Spouse benefits in Social Security often result in discrimination against low-earning workers in a couple, since they will receive the same benefits as the persons who have never worked and therefore never invested into Social Security. Since in most cases the lower-earning person in the household is wife, in the couples where men earn equally those women who never worked are eligible for similar retirement benefits as those who did work but received lower wages (Gitman¸ Joehnk & Billingsley, 2010). On one hand, those women who invested their time in child-rearing and looking after older relatives deserve these payments, but such inequality also rewards those who withdraw from work. It would be useful to introduce a cumulative index for individuals taking into account their work contributions and family contributions. The value of benefits determined using such an index would help to reduce or even eliminate inequality.
Q3. What do you think is the single most pressing political issue for older Americans? Explain your answer.
For older Americans, key political issues are related to financing their retirement and accessing medical services. Currently the most pressing issue is the existence of Social Security fund and its accessibility in the future. There might be different pressures depending on the generation; for example, when the Millennials approach retirement, they might face a depletion of Social Security resources accompanied by additional measures limiting their eligibility (such as increased retirement age) (Gitman¸ Joehnk & Billingsley, 2010). This issue has a direct impact on the lives of older Americans and therefore is the most pressing for them.
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